Note that new information about the Conservator's handling of claims has been recently added to the website. It includes Frequently Asked Questions concerning the claims process. as well as Procedures for Claims Administration and Payments During Conservation. This should provide a convenient answer to most of the questions you may have about the claims handling process of the CastlePoint National Conservation.
- What is the difference between "conservation" and "liquidation" for CastlePoint?
There will be two phases of the receivership of CastlePoint. During the "conservation phase", which started on July 28, 2016 when the Superior Court issued its Order Appointing Insurance Commissioner as Conservator and Restraining Orders ("Conservation Order"), all business activities of the company, including claims administration and payments, are under the control of the Conservator. During the conservation phase the Conservator is required to conduct the company's business in accordance with the Conservation Order and California law, both of which impose certain limitations on claim payments (explained below). The Conservator is also preparing for the eventual liquidation phase, including working with insurance guaranty associations to prepare them to take over administration and payment of claims when the "liquidation phase" starts.
The "liquidation phase" will start when the Court enters an Order of Liquidation for CastlePoint at the request of the Conservator. The Conservator currently estimates that the receivership process will be converted to a liquidation in approximately March of 2017. During the liquidation phase, all policyholder claims will be transferred to the applicable guaranty associations for administration and payment. The Commissioner, who will then be acting in the capacity of Liquidator of CastlePoint, will be responsible for the administration of claims that are not covered by the guaranty associations (or that exceed the amounts covered by the guaranty associations).
- If I have a claim under an insurance policy issued by CastlePoint (or one of the Tower Insurance Companies that merged into CastlePoint), will I be paid during the conservation phase?
Yes, if the claim is approved by the Conservator during the conservation phase, the claim will be paid through a combination of cash and the issuance of an allowed Proof of Claim against CastlePoint, the sum of which will not exceed the stated limits under the policy. The cash payment will be in an amount up to the applicable statutory cap under the state guaranty fund law in the claimant's state. If the policy claim exceeds the applicable guaranty fund cap, the claimant will also receive an allowed Proof of Claim against the CastlePoint estate for the amount of the claim that is not covered by the guaranty association or exceeds the cap. Claimants holding proofs of claims may receive a future payment for a portion of the proof of claim during the liquidation phase, but the amount of any such distribution will depend on the percentage of remaining assets distributed to policy claimants in the liquidation. Such payments will not occur until after the company has been placed in liquidation and the Court has approved an interim or final distribution of assets to allowed claimants.
- Is there a change in how or where I should file my claim during the conservation phase?
No. There is no change in the claims administration functions during conservation. Claimants should continue to file their claims as they have in the past by giving notice of the claim to CastlePoint. If a change is made to the way that your claim is administered, policyholders and claimants will be notified promptly.
- What is a Guaranty Association?
A guaranty association (sometimes called a guaranty fund) is an association of all of the insurers licensed to write property and casualty and workers' compensation insurance in a particular state. A guaranty association becomes responsible for the administration and payment of policyholder obligations of any of the association's member insurance companies that become insolvent and are placed into liquidation, subject to statutory limits that cap the amount that the association is obligated to pay. The guaranty association obtains funds to meet their obligations primarily by assessing the member companies of the association.
- How Much Is The Guaranty Association Cap For My Policy?
The amount of the guaranty association cap depends on the state law that governs the particular guaranty association. The cap may vary based on the type of policy at issue. State guaranty association statutes typically set caps ranging from several hundred thousand to one million dollars. Claimants should check with their guaranty association for specific information on caps and other limitations. Policy claimants with questions regarding which state's guaranty association cap applies to their claim may contact the Conservation & Liquidation Office (contact information is provided below).
- Why Can't The Conservator Pay My Entire Claim During The Conservation Phase?
In an insurance company conservation or liquidation proceeding, the Conservator is required under California law to treat all similarly-situated policy claimants equally in order to avoid "preferences" (that is, paying some similar claimants more than other claimants). California Insurance Code section 1034 and the CastlePoint Conservation Order both expressly prohibit the payment of preferences. Claimants who submit policy-based claims after the company is placed into formal liquidation (which is estimated to occur in March of 2017) will have their claims administered and paid by the applicable guaranty association. The guaranty association will pay up to their statutory cap, and the remainder of the claim will be reflected in an allowed proof of claim in the liquidation proceeding. With the liquidation of CastlePoint on the horizon, the Conservator must provide the same treatment to claimants who submit their claim during the conservation phase as a similar claim would be handled in the liquidation phase. If the Conservator were to pay more than a guaranty association's cap amount to claims submitted during the conservation phase, it is possible that he would later need to recover some of those payments to avoid having paid an illegal preference. This would cause confusion and uncertainty for pre-liquidation claimants, and would potentially prejudice post-liquidation claimants if those funds could not be recovered.
- When Will CastlePoint Be Placed Into Liquidation?
The exact timing of CastlePoint's placement into liquidation will depend on the rate of claims made against the estate and other factors. The Conservator estimates that CastlePoint will need to be placed into liquidation during the first few months of 2017.
- My Claim Is Scheduled For Trial/Mediation. Do I Have To Wait Until The Conservation Is Finished To Pursue A Settlement Or Judgment?
In general, no. The stays and injunctions issued by the Conservation Court apply only to cases in which CastlePoint or one of the Tower Insurance Companies that previously merged into CastlePoint is being sued directly. Where a Tower Insurance Company is acting only in its role as the insurer of a party to an action, that action is not stayed and may proceed. Once a potential claim has been established by a settlement or judgment, it should be submitted to the insurance company for payment.
- How Do I Contact the Conservation and Liquidation Office Regarding My Claim?
Creditors and all other Vendors: 877-813-8531
Claimants: All inquiries about administration of your existing claim should be made to the current claims administrator; other questions should call 877-813-8531.
Please check the Conservation & Liquidation Office website for more information at: www.caclo.org/Castlepoint
The customer service representatives are available from 8:00 am to 8:00 pm EDT Monday through Friday.